Tencent and Guillemot family reportedly considering a buyout as Ubisoft struggles, and shareholders sweat.

Bloomberg reports that the Guillemot family, along with Tencent, are exploring options to right the Ubisoft ship. This could include buying the company out and taking it private.

Sources told the website that both groups had been talking with advisers to discuss possible ways forward. However, it was noted that everything was still in its early stages and that there is no guarantee that a buyout would occur.

Tencent holds just under 10% of Ubisoft's net voting rights. The Guillemot family owns around 20%. But the majority of this share is held by Guillemot Brothers Ltd., a holding firm in which Tencent holds a 49.9% economic interest, but only 5% of the voting rights. If you want to know more, here's a report.

At this point, there are no bad options. Guillemot's perspective suggests that an outright takeover is a bad idea.

Yves, the family and Ubisoft have always resisted attempts to take control of the company from them. Several years ago, they fought a bitter battle against the multimedia conglomerate Vivendi which was attempting to take over the company. I thought that the Guillemots had lost, but Vivendi eventually threw in their towel. That's when Tencent stepped in.

Tencent paid EUR66 for each share when it made its first investment. Recently, those shares hit their lowest price in over a decade and fell to less than EUR10. Tencent has a powerful incentive to act aggressively in order to turn the situation around. However, the 2022 deal that increased its holdings in the company left Tencent with no operational control. This limits what it can directly do. This is not an unchangeable situation, but it complicates things for Tencent's ambitions to take over the company in bulk.

The report does indicate that big things could happen in the near future. Ubisoft's value has dropped over the last four years and its two biggest guns for 2024 failed to deliver. Star Wars Outlaws sales were "softer than anticipated" and Assassin's Creed Shadows, which was originally scheduled for release in December 2024, was delayed to February 14, 2020 at the last moment. Ubisoft announced an internal review to help stop the bleeding. It also confirmed that it will return to Steam after years with the Epic Games Store.

These are minor changes in the big picture, and it is reasonable to assume that investors are now looking for more substantial structural changes. Ubisoft shares have risen sharply in response to the Bloomberg report. It's a minor bump, in historical terms, and still below the price in August. But at least, it's a move in the right directions.